NEWSLETTER of December 8, 2023

The following content has been added at finexpert:

Bitkom
SO DIGITAL IST DIE DEUTSCHE FINANZ- UND VERSICHERUNGSBRANCHE
How loyal are Germans to their bank and how many are considering switching to an online-only bank? Who does their banking online? Are smartphones and smartwatches replacing cash at the till? How complicated is it to take out insurance online? And how widespread is interest in cryptocurrencies such as Bitcoin & Co. The new study report "Digital Finance 2023" by the digital association Bitkom provides answers to these and other questions. >more

Institut der deutschen Wirtschaft (IW)
UNTERNEHMENSINSOLVENZEN AUF DEM WEG NACH OBEN
After a slight increase in 2022, which can also be seen as a step towards normalization following the sharp decline during the coronavirus pandemic in 2020/21, a sharp rise in insolvency cases of almost a fifth is expected in 2023, which is likely to continue in 2024. The trend reversal is being fueled by high energy prices, rising interest rates and the weak economy. In a dynamic economy, however, insolvencies are not exclusively negative. Company closures are part of the structural change in which resources in shrinking sectors are freed up to be put to new, more economically efficient use in growing economic sectors and companies. This applies in particular to scarce skilled workers. However, more innovative start-ups would be important for this. >more

KfW Research
THE CLIMATE FINANCING ROADMAP
Global decarbonization and climate adaptation require trillions of dollars of annual investment, most of it from the private sector. To achieve the goal of limiting global warming, climate protection investments worldwide must increase by at least 30% annually – three times faster than before. Development finance institutions (DFIs) are seen as key mobilizers of these flows, catalysing private financing in particular. A joint paper by BCG and KfW provides a big-picture perspective on how DFIs are innovating and evolving in sync with their ambitious climate financing goals. Along several dimensions – from the business and operating models to the necessary regulatory and policy framework – this paper explores how development and promotional banks globally can make a valuable contribution to closing the looming financing gap. >more

Deutsche Bank Research
M&A OUTLOOK 2024: THE RECOVERY BEGINS
It has been a brutal two years for dealmaking. Following the M&A boom of 2021, the value and volume of deals remains well below historical averages in the US and Europe. Yet, we see 2024 as a year of recovery for M&A activity, and there are three key themes we believe will catalyse it: 1. Eager buyers and valuation dislocations, 2. The need for large firms to supplement declining organic profit growth, 3. Greater certainty in the financing backdrop. >more

M&G Investments
GLOBAL REAL ESTATE OUTLOOK: NEGOTIATING HIGHER RATES AND OTHER NEW PARADIGMS
With increasing talk of ‘higher for longer’ interest rates, global real estate markets are adapting to new paradigms. Property yields have risen, but not to the same degree as rates, prompting some to suggest further repricing is needed in order to restore spreads. But is real estate dependent on a wide spread over bonds to deliver performance, or can other return drivers compensate? With ongoing inflationary pressures and other headwinds buffeting the global economy, we assess the growth prospects for rents and how they differ across regions and sectors given varied structural and cyclical trends. Investors may be drawn to growth, but are there also attractive income yields to be found? In this Global Real Estate Outlook, we explore the opportunities as well as the risks that need to be considered. >more

CROSS-BORDER MERGERS AND DIFFERENCES IN CORPORATE GOVERNANCE
Laura T. Starks, and Kelsey D. Wei
2023
We examine whether corporate governance differences affect firm valuation in cross-border mergers. We find that takeover premiums are decreasing in the quality of the foreign acquirer’s home country governance for deals completed with stock, suggesting that the acquirers compensate target shareholders for the resulting exposure to inferior corporate governance regimes. Correspondingly, we find that the acquiring firm stockholders’ abnormal returns at the merger announcement are increasing in the quality of corporate governance for stock offers. Finally, we find that foreign acquirers from countries with better corporate governance are more likely to make stock offers. >more

MATURITY OVERHANG: EVIDENCE FROM M&A
Zhiyao Chen, Dirk Hackbarth, Jarrad Harford, and Yuxin Luo
2023
In the context of mergers and acquisitions, this paper analyzes a maturity overhang problem that is due to shorter debt maturities creating higher rollover risk. Using bond transaction data, we develop a market-based measure of rollover risk and find that i) rollover risk dampens merger activities at the firm and aggregate levels; ii) acquirers facing higher rollover risk are more sensitive to changes in cash reserves and prefer equity as a payment method over cash; and iii) positive market reactions to cash payment are observed only when firms have low rollover risk. To shed light on our empirical findings, we study a dynamic investment model that underscores the importance of precautionary savings and rollover risk for maturity overhang. >more